2023 Turkey Real Estate: Decline in Foreign Sales and Market Trends

Turkey’s real estate market has seen significant shifts in 2023, with a notable decline in foreign property sales. According to data from the Turkish Statistical Institute (TÜİK), property sales to foreigners dropped by 40% in the first eight months of the year compared to the same period in 2022. Despite this downturn, overall property sales in Turkey have seen growth, with a 1.1% increase from January to August 2023. This article will explore the factors influencing the decline in foreign property purchases, highlight trends in domestic demand, and provide insights for potential buyers in Turkey’s evolving real estate market.

Foreign Property Sales in Turkey: A Dramatic Decline in 2023

According to TÜİK’s latest data, foreign property sales in Turkey dropped by 26.2% in August 2023 compared to the previous year. This follows a consistent decline in sales to foreigners since May 2023. The overall share of foreign buyers in total property transactions in August was just 1.7%, with 2,257 properties sold to non-Turkish residents. This marked a sharp drop from previous years when foreign investments played a significant role in Turkey’s real estate boom.

Why Are Foreign Property Sales Declining?

The steep decline in foreign property sales is primarily driven by several factors:

1. Economic Instability: The global economic landscape has shifted, with inflation and currency fluctuations making property investments in Turkey less attractive for foreign buyers.
2. Political Uncertainty: Geopolitical tensions and regional conflicts have also contributed to a cautious approach by foreign investors.
3. New Regulations: Changes in Turkey’s property ownership and citizenship laws for foreigners may have dampened enthusiasm for real estate investment in the country.

Domestic Property Sales on the Rise

While foreign sales are declining, domestic property sales in Turkey have seen positive growth. August 2023 recorded a 9.9% year-on-year increase in property transactions, reaching a total of 134,155 units sold. For the period between January and August 2023, a total of 806,317 properties were sold, marking a 1.1% rise compared to the previous year.

The Resilience of Domestic Demand

Domestic buyers are playing an increasingly critical role in stabilizing Turkey’s real estate market. Several factors contribute to the rise in local property purchases:

• Government Support: Incentives and favorable mortgage conditions provided by the Turkish government are encouraging more locals to invest in real estate.
• Low Prices for Locals: Compared to foreign buyers, local investors have the advantage of more stable pricing without the influence of currency exchange rates.
• Demand for Residential Space: With urbanization continuing at a rapid pace, Turkish residents are increasingly seeking properties in metropolitan areas like Istanbul, Ankara, and Izmir.

Regional Breakdown: Who’s Still Buying in Turkey?

Despite the overall decline, certain nationalities continue to show interest in Turkey’s real estate market. In August 2023, the Russian Federation led the way with 381 properties purchased, followed by Iran with 171 properties, and Ukraine with 161 purchases. This regional interest shows that while total foreign sales are down, demand from countries like Russia remains relatively stable.

Why Russians, Iranians, and Ukrainians Still Invest in Turkey

• Russians: Due to political and economic instability in Russia, many citizens are looking to move or invest in more stable regions, and Turkey remains an attractive option due to its geographic proximity and relatively affordable properties.
• Iranians: Economic sanctions and instability in Iran have pushed many Iranians to invest in real estate abroad, with Turkey being a popular destination.
• Ukrainians: The ongoing conflict in Ukraine has driven some citizens to seek safe havens for their wealth, and Turkish property offers a practical solution.

How Turkey’s Real Estate Market is Evolving

Turkey’s real estate market is undergoing significant changes in response to both global and domestic challenges. While foreign investments have decreased, the growth in domestic sales is helping to stabilize the market. The decline in foreign sales since May 2023 indicates that the sector may need to rely more on local buyers in the coming years.

Trends Shaping the Future of Turkey’s Real Estate Market

1. Increased Local Investment: Domestic demand is expected to continue rising, supported by government incentives and an increasing number of urban buyers.
2. Shift in Foreign Investor Base: Although overall foreign sales are declining, Turkey may see a shift in the type of foreign investors, with more buyers coming from regions facing political or economic instability.
3. Property Development Boom: As demand for residential and commercial space grows, especially in major cities, Turkey’s construction sector is likely to experience a surge in new developments.

Opportunities for Foreign Buyers: Is Now the Right Time to Invest?

While foreign property sales have dropped, potential investors may still find opportunities in Turkey’s evolving real estate market. Property prices in some areas have become more affordable due to the decline in foreign demand, and those who act quickly may be able to secure properties at lower prices.

Benefits of Buying Property in Turkey

1. Affordable Prices: With the drop in foreign demand, some regions may offer lower property prices, making it a buyer’s market.
2. Turkish Citizenship: Turkey’s real estate laws still provide a pathway to citizenship for foreign investors who meet certain requirements, making the country an attractive option for those seeking a second passport.
3. Strong Rental Market: With increasing urbanization and domestic demand, property owners in Turkey can benefit from a robust rental market, especially in popular tourist and business hubs.

Conclusion: A Shift in Turkey’s Real Estate Market

Turkey’s real estate market is in a state of transition, with domestic buyers playing an increasingly important role as foreign sales decline. However, for savvy foreign investors, this could present an opportunity to enter the market at a more affordable price point. Understanding the trends and key factors affecting property sales in Turkey will be crucial for anyone considering buying real estate in the country.

For those interested in learning more about the best places to invest or visit in Turkey, check out the Travel Guide of Türkiye at VisitTurkey.in.